Immigration reform has many facets: It must pro­tect
national security, uphold the rule of law, strengthen citizenship,
and benefit the American economy.[1] The overall effect must be to
reduce illegal immigration in to the United States. Although border
security generally receives more attention,[2] serious enforcement
of current laws prohibiting the employ­ment of illegals is also
an important tool in an overall strategy to reduce illegal
immigration.

The majority of persons who enter the U.S.
ille­gally or unlawfully overstay temporary visas do so for
purposes of employment. Employment of such indi­viduals has
been illegal since 1986, although that law has never been seriously
enforced. If access to employment were curtailed in accord with
that law, many (probably even a large majority) of current
ille­gal immigrants would leave the country voluntarily, and
the number of future illegal entrants would be greatly reduced.

Since employment is the magnet that draws illegal immigrants
into the U.S., it follows that the best way to reduce illegal
immigration is to shrink the employ­ment magnet. To accomplish
this without resorting to the method of routinely rounding up and
deporting thousands of illegal workers only to have them return and
obtain another readily available job, policy should focus on the
businesses that hire illegal immigrants and let general employment
rules rather than individ­ual arrests drive the reduction in
illegal immigration.

The policy should be based on the principles of
empowerment, deterrence,and information. It
should empower honest employers by giving them the tools to
determine quickly and accurately whether a new hire is an
authorized worker. It should hold employers free from penalty if
they inadvert­ently hire an illegal worker after following the
pre­scribed procedures.

Further, the policy should empower honest employers by freeing
them from the burden of com­peting with dishonest businesses
that deliberately hire illegal workers. This means that it must
deter dishonest employers who willfully employ unveri­fied and
unlawful workers by imposing substantial penalties on the employers
when such hiring occurs. For deterrence to work, however, both the
government and employers must have timely and accurate information
regarding new hires.

The most promising solution to this problem is a tool called
E-Verify. A real-time, Web-based verifica­tion system run by
the Department of Homeland Security (DHS) and the Social Security
Administra­tion (SSA), E-Verify can determine with great
accu­racy the authenticity of the personal information and
credentials offered by new hires. In most cases, verification
occurs almost instantly.

With the improvements suggested in this paper and those ongoing
refinements to the existing pro­gram, E-Verify can be highly
effective in reducing the employment of illegal immigrants. It is
possible that an eventual mandatory use of E-Verify by all
businesses could eliminate nearly all of the "on-the-books"
employment of illegal immigrants in the U.S.-an estimated 4 million
illegal workers.

Congress should reauthorize E-Verify as it cur­rently exists
and work to expand its reach and effi­cacy significantly in
recognition of the fact that the law prohibits employers from
hiring illegal immi­grants and that the objective of E-Verify
is to enforce that law.

This approach, combined with targeted enforce­ment and stiff
penalties for those who do not com­ply with verification
requirements, will significantly deter unlawful employment and
thereby reduce the demand for illegal workers. That will, in turn,
reduce the chief incentive of those seeking to enter the United
States illegally.

Understanding the Employment of
Illegal Immigrants

By most estimates, around 8 million illegal immi­grants work
in the U.S. There are generally three means by which illegal aliens
obtain employment.

Working "on the books" with a fictitious Social Security
number. In this situation, the illegal alien is employed
formally by a business, just as any other employee is. The employer
withholds Social Security (FICA) taxes and files a W-2 tax form for
the employee. The illegal employee presents identity documents to
the employer showing that he is either a U.S. citizen or lawful
immigrant entitled to work.

These documents will contain a name, date of birth, Social
Security number, and possibly a green card number, which are either
partially or completely fictitious. The employer dutifully records
this fictitious information on an official form called an I-9 and
stores the form in a file cabinet. If the information on the I-9
were checked, it would immediately be found to be fraudulent; at
present, however, there is no prac­tical means for the
government to corroborate the information on the I-9.

Working "on the books" through identity fraud. In this
situation, the illegal alien is also employed by a business just
like any other employee. The employer withholds Social
Secu­rity (FICA) taxes and files a W-2 tax form for the
employee. The illegal employee presents iden­tity documents to
the employer showing that he is either a U.S. citizen or lawful
immigrant enti­tled to work.

However, in this case, the name, date of birth, Social Security
number and (in some cases) green card number on the documents
corre­spond to the identity of a real U.S. citizen or lawful
immigrant. To obtain employment, the illegal fraudulently assumes
the identity of another real person. The employer records the
fraudulent information on the I-9 and keeps the I-9 on file, but
neither the employer nor the gov­ernment checks to determine
whether the employee is the person he purports to be.

Working "off the books." In this situation, the employer
deliberately conceals the employment of the illegal alien from the
government. There is no public record of the employee, no W-4
with­holding form is filed, FICA taxes are not paid, and no W-2
statement is sent to the government. It is very unlikely that an
I-9 form is completed or kept.

Of the millions of illegal immigrants in this country, the best
evidence suggests that some 50 percent to 60 percent of this
employment occurs "on the books."[3] It is unclear how much
"on-the-books" employment of illegal aliens is done with
fic­titious information and how much is done by iden­tity
fraud.

To reduce illegal immigration, all three means of illegal
employment must be addressed, but this need for a broad approach
should not be used as an excuse to do nothing. Although it is true
that reduc­ing "off-the-books" employment will be the most
difficult task, that does not mean that the govern­ment should
do little or nothing about the high lev­els of "on-the-books"
illegal employment until it has devised a foolproof means of
stopping underground employment as well. Proper policy should take
the critical first step of controlling "on-the-books" employment of
illegal aliens.

History of Employee Verification

In 1986, the Immigration Reform and Control Act (IRCA) granted
amnesty and the right to U.S. citizenship to 3.1 million illegal
aliens.[4] In exchange for this amnesty, Congress
promised U.S. voters that the government would take effective
measures to eliminate future illegal immigration. A major element
of the promised policy was employ­ment security: measures
designed to prevent or reduce significantly the future hiring of
illegal immigrants within the U.S. But Congress has
delib­erately failed to fulfill its 20-year-old promise.

IRCA made it unlawful for U.S. employers to knowingly hire
illegal aliens and required employ­ers to examine worker
documents to determine whether newly hired employees are eligible
to work in the U.S. In practice, this system has proven to be
ineffective because illegal aliens were able to obtain forged
documents purporting to show that they were either lawful
immigrants or U.S. citizens. Because employers were unwilling or
unable to ver­ify the authenticity of these documents, the
federal prohibition on the hiring of illegal aliens became nearly
meaningless. Congress understands this situ­ation but has
refused to take any action to correct it.

Ten years later, in 1996, Congress enacted the Illegal
Immigration Reform and Immigrant Respon­sibility Act (IIIRA).
As introduced, this legislation would have required universal
verification of infor­mation on the I-9 forms.

Some business interests and the pro-illegal immigrant lobby
blocked this effort. Instead, the act took a small tentative step
toward enforcing the pro­hibition on the employment of illegals
by creating a pilot Employment Eligibility Verification System
(EEVS) to enable employers to determine the authenticity of
documents presented by newly hired employees. The law required the
EEVS (called Basic Pilot) to be implemented in a minimum of five of
the seven states with the highest number of illegal aliens. These
five states were California, Florida, Illi­nois, New York, and
Texas. Nebraska was added to the program a few years later.

Participation in the EEVS by employers in these states was
voluntary. In 2003, after six years of EEVS operation, Congress
expanded the system to allow voluntary participation by employers
in all 50 states.

At present, some 82,000 employers participate in the EEVS system
(now called E-Verify) voluntar­ily. If current trends continue,
over 5 million employees will be checked through E-Verify during
2008; this will represent slightly less than 10 per­cent of
total new hires in the U.S. during the year.

In June of this year, the Bush Administration issued an
executive order requiring all federal con­tractors to utilize
E-Verify in hiring. This will increase future use of the E-Verify
system to well above current levels.[5]

How E-Verify Works

E-Verify is a Web-based electronic verification system operated
by the Department of Homeland Security and the Social Security
Administration that allows employers to check instantly the
authenticity of identity information provided by new employees. In
general, the employer will use a personal com­puter to submit
certain basic information concern­ing the employee (name, date
of birth, Social Security number, etc.) to the government. The
infor­mation is securely transmitted to DHS and SSA, and DHS
checks the information to determine whether it corresponds to a
U.S. citizen or to a work-eligible immigrant. In most cases, DHS
can check and con­firm the employee information and transmit a
defin­itive reply to the employer within seconds.

The E-Verify system thus provides a very quick and largely
accurate check of the authenticity of information presented by
newly hired employees. The system also provides a simple and rapid
mech­anism to correct initial erroneous determinations. There
are eight steps in the full E-Verify process.

Participating employers use E-Verify to confirm the legal
status of newly hired employees. By law, employers are directed not
to use E-Verify to screen job applicants.

Participating employers must electronically ver­ify the
status of all newly hired workers within three days of hire, using
information that an employee is already required to provide on the
Form I-9. Employers enter information (name, date of birth, Social
Security number, and citi­zenship status) into a simple form
that is acces­sible on the Department of Homeland Security Web
site.

DHS receives and checks the data. If the employee claims he is
a U.S. citizen, his data are checked against the Social Security
Administra­tion data files. If the employee claims he is a
non-citizen lawful immigrant, his status is checked against the SSA
database and then against the main DHS automated immigrant database
at U.S. Citizenship and Immigration Services (USCIS). If the
non-citizen employee data cannot be corrob­orated by the USCIS
automated check, the case is referred to a USCIS immigration status
verifier, who checks the employee's information against other DHS
databases.

If the employee information submitted to E-Ver­ify is
corroborated by the SSA database, by the USCIS automated database,
or by the immigra­tion status verifier's review, DHS sends the
employer an electronic positive confirmation notice
certifying that the employee is an eligible worker. A full 94
percent of E-Verify submis­sions receive initial positive
confirmations, most within three to five seconds of the query's
being sent. The overwhelming majority of those who do not receive
an initial positive confirmation are, in fact, unauthorized
workers.[6]

If the information submitted by the employee does not match any
information in the SSA and USCIS records, E-Verify automatically
gives the employer the opportunity to double-check the submitted
information for clerical errors. If cleri­cal errors are found,
the employee's data can be resubmitted immediately, and a positive
confir­mation can be received from DHS within sec­onds. If
no clerical errors are found, or if the information still does not
match any information in SSA and USCIS records, then E-Verify
issues a tentative non-confirmation to the employee.

In the case of a tentative non-confirmation, the employee has
eight working days to contest or clarify the non-confirmation by
contacting a local SSA office (if he is a citizen) or a USCIS
office (if he is a lawful immigrant). The employee then makes an
appointment with the appropriate local office to determine the
cause of the tentative non-confirmation. If the employee is in fact
a citizen or a lawful, work-eligible immigrant, the tentative
non-confirmation will, in almost all cases, be the result of a
clerical error or obsolete information in the SSA or USCIS
databases. These errors can be resolved quite simply. Information
concerning naturalization status can be resolved by a toll-free
phone call. Ninety-five percent of contested non-confirma­tions
are resolved with a single phone call or appointment.

If the employee chooses not to contest the tenta­tive
non-confirmation or has not provided infor­mation to alter the
non-confirmation within eight working days, DHS sends a final
non-con­firmation to the employer electronically.

After receipt of a final non-confirmation, the employer must
either (a) discharge the em­ployee or (b) notify DHS that it
plans to con­tinue employment. This allows employers to
continue employment in situations where they are certain the
non-confirmation is incorrect and will be rectified at some
point.[7]

A survey conducted in 2004-2005 by the Office of the Inspector
General (OIG) of the Social Security Administration found that
employers using the EEVS were well satisfied with the system. All
of the employers surveyed rated the program from "good" to
"excellent." Ninety-eight percent said that they would continue to
use the program voluntarily.[8]

Remarkable Accuracy: Confirmations and
Non-Confirmations

In 2007, Westat, an influential private research firm located in
Rockville, Maryland, conducted a formal evaluation of E-Verify and
its predecessor, Basic Pilot, for the DHS. As part of this
evaluation, Westat reviewed all 2.7 million employee
submis­sions to Basic Pilot/E-Verify between October 2005 and
March 2007. The Westat evaluation provides the most thorough
information currently available on the operation of E-Verify.[9]

During that period, 92 percent of submissions received an
initial positive confirmation; around 1 percent of submissions
received an initial ten­tative non-confirmation that was
contested and converted into a final positive confirmation once
information discrepancies were corrected; and around 7 percent of
submissions resulted in final non-confirmations, nearly all
resulting from initial tentative non-confirmations that were never
contested.[10]

Among all employees who were eventually found to be
work-authorized, 99.4 percent received an initial positive
confirmation, and 0.6 percent received an initial tentative
non-confir­mation that was corrected by a brief visit to an SSA
or USCIS office.[11]

Among individuals found to be native-born cit­izens, 99.9
percent received an initial positive confirmation, and 0.1 percent
received an initial tentative non-confirmation that was quickly
corrected.[12]

Among work-authorized, foreign-born individu­als, 97
percent received an initial positive confir­mation, and 3
percent received an initial tentative non-confirmation that was
quickly corrected.[13]

Overall, the evaluation showed that E-Verify was very successful
in distinguishing between autho­rized and unauthorized workers.
As noted, 7 per­cent of submissions to E-Verify resulted in
final non-confirmations; the Westat evaluation estimated that 95
percent of these final non-confirmations were, in fact,
unauthorized workers seeking em­ployment.[14] If used widely,
the system has the potential to block nearly all employment based
on fictitious identities.

On the other hand, the Westat report estimated that 5 percent of
final non-confirmations under the system may have been authorized
workers. These misidentified workers represented about one of every
300 persons reviewed by E-Verify. The Westat evaluation reported no
instances in which autho­rized workers who received a tentative
non-con­firmation were unable to contest the ruling
successfully and establish proper work authoriza­tion. Instead,
the misidentified workers were indi­viduals who received an
erroneous initial tentative non-confirmation but failed, for a
variety of reasons, to contest that ruling.

In summary, the system did a very good job of identifying
authorized and non-authorized work­ers. It also provided a
process for correcting errone­ous initial findings. However,
the system did generate a small number of erroneous final rulings
when lawful workers failed to contest inaccurate initial rulings,
an issue that will be discussed fur­ther below.

Accuracy of the Social Security
Database Used in E-Verify

The Social Security Administration has assigned over 435 million
Social Security numbers to individ­uals. When SSA assigns a
Social Security number, it creates a Numident file, or master
record, of the number and the individual to whom it is
assigned.

When a newly hired employee is checked through E-Verify, the
information provided by the employee is checked against information
in the Numident files at SSA. Therefore, the accuracy and
efficiency of E-Verify are contingent on the accuracy of the
Numident files.

How accurate are the SSA Numident files? In 2004-2005, the
Office of the Inspector General of SSA conducted an audit of the
Numident files to assess their accuracy with respect to the
operation of E-Verify.[15] The audit showed that Numident files were
generally accurate. Although 4.1 percent of the Numident files were
found to contain a data discrepancy, those discrepancies would
rarely inconvenience lawful citizens and residents being checked by
E-Verify, nor would they impede signif­icantly the ability of
E-Verify to identify illegal immigrants seeking employment.

To understand better the results of the OIG audit, it is
important to recognize the difference between "false negative" and
"false positive" dis­crepancies in the Numident database. A
"false neg­ative" discrepancy would result in a "tentative
non-confirmation" being incorrectly issued for a citizen or legal
resident lawfully permitted to work. That individual would need to
go to the local SSA or USCIS office to correct the discrepancy. A
"false pos­itive" discrepancy, on the other hand, could cause
an unauthorized individual to receive an erroneous "positive
confirmation" through E-verify.

While the OIG audit showed that 4.1 percent of Numident records
contained a discrepancy, roughly two-thirds of the discrepancies
were of the sort that might result in a "false positive"
confirma­tion, while only one-third were the sort that would
result in a "false negative" non-confirmation. More­over, the
"false negative" discrepancies were simple clerical matters that
could be corrected with very little inconvenience to lawful
workers. The most common of these discrepancies were failure to
change a woman's maiden name after marriage, clerical errors
concerning date of birth in the Numident file, and failure to
update information concerning naturalization.

The "false negative" error rates generated by Numident errors
vary between groups. For native born citizens, the rate was 0.5
percent; for natural­ized citizens, the rate was 0.7 percent;
and for indi­viduals listed as non-citizens in the Numident
files, the rate was 10.4 percent.

Most cases in the third group involve immigrants who have been
naturalized but have no record of that fact in their Numident
files. Until very recently, out-of-date naturalization data in SSA
data files were the largest source of erroneous tentative
non-confirmations for E-Verify. If a worker reported he was a
citizen but his SSA Numident file showed oth­erwise, E-Verify
issued a tentative non-confirmation even if USCIS data would have
shown that the indi­vidual was a citizen or otherwise
work-eligible.

In May 2008, DHS implemented new proce­dures to fix this
problem by checking individuals against both SSA and USCIS
electronic records before issuing a tentative non-confirmation.
With this fix, the effective "false negative" error rate for
"non-citizen" Numident files should fall signifi­cantly.
(Regrettably, USCIS does not have electronic records of
naturalizations that occurred before 1995, so the current fix does
not entirely eliminate this problem.)

In sum, the OIG analysis suggests that errors in the Numident
files might cause about 1.6 percent of individuals to receive a
"false negative" response from E-Verify. Since half of these "false
negatives" would be caused by the naturalization data issue, the
recent fix by DHS will reduce this rate signifi­cantly. The
remaining individuals would receive a "tentative non-confirmation"
from E-Verify that would require them to visit their local SSA
office to update or correct the information in their Numi­dent
files. Given the simple nature of the errors revealed in the OIG
audit, correcting the Numident data in this manner should not prove
difficult.

Moreover, the "false negative" error rate would shrink over
time. The existing errors in the Numi­dent database have built
up over decades, but each "false negative" error needs to be fixed
only once. If use of E-Verify was required for all new hires, the
bulk of existing "false negative" discrepancies would be purged
from the Numident files within a few years, and the future,
long-term "false negative" error rate would fall even lower.[16]

Reducing Erroneous Non-Confirmations
in E-Verify

As noted, the Westat evaluation of E-Verify found that 6 percent
to 7 percent of verification requests resulted in a final
non-confirmation. The evaluation estimated that 95 percent of these
final non-confir­mations represented illegal immigrants seeking
unlawful employment. E-Verify therefore seems quite effective in
identifying a high level of potential unlawful employment. However,
the Westat analy­sis also estimated that around 5 percent of
E-Verify's final non-confirmations may incorrectly identify lawful
workers as unauthorized. The Westat figures thus suggest that as
many as one lawful employee in 300 may receive an erroneous final
confirmation from the present system.[17]

As also noted earlier, the Westat analysis identi­fied no
cases in which the contest process failed to identify
authorized workers properly; instead, all of the estimated
erroneous non-confirmations were deemed to occur because employees
receiving mis­taken tentative non-confirmations failed to
contest the initial inaccurate ruling.

Westat determined that lawful workers may fail to contest an
erroneous tentative non-conformation for four reasons.

The newly hired individual may have found a better employment
offer from another firm.

The first employer may have continued to employ the worker
irrespective of the non-con­firmation, thereby making a
resolution of the issue unnecessary.

The worker may have failed to understand the process for
contesting the tentative non-confir­mation. (Lack of
understanding of the verifica­tion process would undoubtedly
become less frequent if E-Verify becomes broadly used.)

Most important, the employer may have screened the job
applicant through E-Verify improperly before hiring, received a
tentative non-confirmation, elected not to hire the
indi­vidual, and simply failed to inform the applicant that he
had been tentatively identified as an unauthorized worker.

Government rules specify that E-Verify is to be used to check
new employees immediately after they have been hired; employers are
not supposed to use this system to pre-screen job applicants before
hir­ing. In addition, employers are required to inform all
workers of the results of their E-Verify screenings.

But not all employers follow these rules, and some may use
E-Verify to screen applicants and turn down applications from
persons with tentative non-conformations without ever informing
them that a non-conformation has been received. If such improper
use of E-Verify became widespread, it might be possible for a
lawful work-eligible individ­ual with clerical errors in his
SSA file to be turned down for a series of job openings without
knowing the reason why. Even though this would occur very
infrequently, it would be a real problem for the indi­vidual
involved.

Fortunately, it is possible to reduce the frequency of such
problems through two policies.

Reduce simple errors in the E-Verify system. Nearly all
erroneous tentative non-confir­mations are the result of simple
errors in the E-Verify databases. These commonly include misspelled
names, clerical errors in date of birth, or missing date of
birth.

As noted, the most common source of error overall has been missing
naturalization data in the SSA files; probably half of all
erroneous non-confirmations have stemmed from this problem. DHS has
recently taken steps to reduce this source of error significantly
by checking both SSA and USCIS files before issuing a tentative
non-confirmation. However, USCIS does not have data on
naturalizations that occurred before 1995 in accessible electronic
form. Con­verting these earlier naturalization data into an
electronic form would further reduce this source of error.

Another frequent source of erroneous non-con­firmations has
been women applying for work using their married names while still
being listed by their maiden names in SSA files. Strongly
encouraging women to enter both maiden and married names as part of
their input to E-Verify would reduce this source of error.

Give individuals opportunities to determine the accuracy of
SSA data before applying for a job. Individuals should be given
an easy oppor­tunity to confirm the accuracy of their personal
SSA/USCIS files independently of the job applica­tion process.
This change would enable all lawful prospective job seekers to
check their Numident files for errors before applying for a job,
thereby eliminating the infrequent but real prospect of being
turned down for a job opening because of an erroneous tentative
non-confirmation stem­ming from a clerical error.

Under the proposed system, individuals could pay
government-licensed contractors to corrobo­rate the accuracy of
their personal SSA/USCIS files. The process would be the same as an
ordi­nary E-Verify check but would not require the individual
to be hired for a new job. Like normal employers, the contracting
firms would not be able to access SSA files directly, but only to
deter­mine whether the personal information submit­ted by a
client matched the government's records.

Most faulty personal data in SSA files will need to be corrected
at some future point irrespective of how the information is used in
the E-Verify system. Under present conditions, an individual may
not become aware of problems in his or her SSA file until applying
for retirement benefits. But it is better to correct faulty SSA
data sooner rather than later because individuals who are employed
with faulty or mismatched SSA identity records may not get full
credit for their employment for purposes of calcu­lating future
benefits. While correcting errors in the SSA files may be slightly
inconvenient, it is in the best interest of the individual to
correct all problems as soon as possible.

Employer Perceptions of E-Verify

According to the Westat study, nearly all employers using
E-Verify expressed high levels of satisfaction with the system.
Ninety-nine percent reported that the computer interface was "user
friendly" or "very user friendly." Ninety-six percent recently
reported that using the system did not "overburden" their staff.
Only 4 percent found the system "hard to use."[18]

On the other hand, 11 percent of employers reported that they
encountered at least some diffi­culty or inconvenience in
operating the system. The difficulties reported were generally
modest. Com­monly mentioned difficulties included
unavailabil­ity of the system during certain times,
difficulties accessing the system, and training new staff to
per­form verifications using the system. Some employ­ers
also identified problems related to passwords. Others commented
that local Social Security Administration representatives were not
familiar with the Web Basic Pilot program, did not return their
calls, or were unable to answer their ques­tions.[19]
DHS continues to work to improve the operation of the system.

Costs to Business of Operating
E-Verify

Opponents of E-Verify often charge that the system is too
expensive for employers to use and that small firms, in particular,
would face prohib­itive costs. Indeed, there is a cost to
business from using E-Verify.

DHS has registered a number of "designated agents" who process
E-Verify queries for other U.S. businesses on a fee-for-service
basis. Any company that wishes to use E-Verify but does not want to
learn to operate the system for itself can hire a des­ignated
agent to do the clearances.

These firms, on average, charge between $2 and $15 per employee
submission.[20] Moreover, a law requiring general use of
E-Verify would create greater competition and economies of scale in
E-Verify processing, reducing costs below the already low current
levels. A firm that faces higher internal costs to operate E-Verify
for its employees can con­tract out the process to a designated
agent. Such contracting out is already a typical business
prac­tice. For example, many small and moderate-size businesses
already hire outside payroll service companies to perform their
payroll and tax pay­ment functions.

The Office of Management and Budget estimated the costs to
business of requiring federal contractors to use E-Verify for their
employees. OMB estimated that firms would incur start-up and
administrative costs of around $15 per vetted employee, primarily
for the initial and recurring costs of training person­nel to
use the system, and that the operational cost of actually
processing individuals through this sys­tem (including the
costs of dealing with temporary and final non-confirmations) would
be around $6.70 per processed employee. Thus, the overall costs to
business to administer and operate E-Verify would total about $22
for each employee checked.[21]OMB did not consider whether costs could
be cut by contracting out with designated agents or other personnel
service companies.

The Westat evaluation of Basic Pilot/E-Verify also found low
employer costs. Firms surveyed in the study reported very low costs
per employee to set up the E-Verify system and operate it over a
year. For example:

Firms with between 100 and 250 employees reported average setup
costs and annual operat­ing expenses of $646, or around $4.00
per standing employee;

Firms with 251 to 500 employees reported average costs of $746,
or around $2.00 per employee; and

Firms with between 501 and 1,000 employees reported average
setup and annual operating costs of $473, or less than $1.00 per
employee.[22]

Given these estimates, the costs of implementing E-Verify appear
modest in comparison to the mag­nitude of the illegal
immigration problem. There are roughly 63 million new hires in the
U.S. each year. At an average cost of $10 per employee,
compre­hensive use of E-Verify for all new hires would cost
employers around $600 million per year, or around 1/200th of 1
percent of the economy. This sum equals approximately $6.00 for
each household in the U.S. Of course, it is always important to be
cau­tious when government adds new regulatory bur­dens to
business, especially since these costs tend to be invisible to the
taxpayer.

Moreover, the future costs to business of operat­ing
E-Verify could be substantially reduced by the elimination of
duplicative governmental processes. Employers are already required
by law to provide nearly all of the worker information used in
E-Verify to the National Directory of New Hires (NDNH), which is
operated by the Office of Child Support Enforcement (OCSE) at the
U.S. Department of Health and Human Services (HHS). Though
E-Ver­ify is fast and provides real-time feedback to employers,
the child support data collection system is very slow and provides
little useful feedback.

If all employers used E-Verify, NDNH data col­lection would
become redundant, and initial new-hires data could be collected
through E-Verify and transmitted to OSCE, eliminating the need for
duplicate data submissions from business. In this case, the extra
cost for business to operate E-Verify could fall to zero, although
there would still be the temporary cost of transitioning from NDNH
to E-Verify.

Costs to Government of Expanding
E-Verify

Currently, E-Verify is used to check less than one-tenth of
total new hires in the U.S. If it were used for all new hires each
year, the cost to government to operate the system would rise, with
most of the added costs occurring in USCIS. This agency has
estimated that a phased four-year expansion of E-Verify resulting
in the ongoing coverage of all new hires in the fourth year would
cost $765 million over the four-year period. Coverage of all new
hires and current employees in four years would cost $838 million,
or an average of $210 million per year.[23]

Expansion of E-Verify use would also result in added costs to
SSA because extra staff would be needed to process the increase in
contested "tenta­tive non-confirmations." SSA has estimated
that a phased expansion to cover all current employees and all new
hires annually would cost it $281 mil­lion over five years, or
$55 million per year.[24]

In total, then, the cost to government of imple­menting
universal E-Verify coverage would be around $1 billion over four
years. This amounts to about $2.50 per U.S. household per year.

Additional government expenditures might be required to meet the
costs of prosecuting employers who willfully disregarded the
E-Verify system by employing workers found to be unauthorized;
how­ever, fines on such employers could offset some or all of
this enforcement cost.

Current Fines and Penalties for Hiring
Illegal Aliens

It is illegal under current law to "hire, or to recruit or refer
for a fee for employment" any indi­vidual who is known to be an
authorized alien.[25] It is also unlawful to hire an individual
without com­plying with the current employment verification
system (i.e., examining identity documents and fill­ing out an
I-9 form).[26] The law provides civil and criminal
penalties for violations by employers, but these penalties are
generally too modest to serve as a deterrent to unlawful
hiring.

Civil Fines. Employers face civil fines of between $100
and $1,000 per employee for failure to examine documents and file
I-9 forms.[27] They face steeper civil fines for
deliberately employing persons known to be illegal aliens; these
fines are from $250 to $2,000 per alien employee for the first
offense and rise to from $3,000 to $10,000 per alien employee for
repeat offenses. However, to impose these penalties, the government
must prove that the employer knew the hired alien was
unauthorized.[28]

Under the current system of civil fines, DHS nor­mally
issues a "notice of intent to fine" (NOIF) to an employer found to
be in violation and then negoti­ates an out-of-court settlement
with the employer. A few cases are taken before administrative law
judges. It is generally felt that these civil penalties are too low
and enforced too infrequently to have much, if any, deterrent
effect on employers.[29] Many employers simply treat the
possibility of a small fine as a normal, minor cost of doing
business.

Criminal Penalties. The law also provides for criminal
penalties for a "pattern or practice" of hir­ing illegal
aliens.[30] These fines may not exceed $3,000 per
alien, but they may include imprison­ment of the employer for
up to six months for the entire offense. Enforcement of these
provisions requires an indictment and prosecution. Additional
criminal charges relating to tax evasion, abetting of identity
theft, and violations of labor law may also be apply in some
cases.

In recent years, Immigration and Customs Enforcement (ICE) has
downplayed the pursuit of civil fines as ineffective. Instead, it
has sought con­victions and penalties for criminal violations,
often working with a variety of other government agen­cies.[31] In
2007, ICE enforcement activities against employers resulted in over
850 criminal arrests and over $30 million in fines.[32]

While recent ICE enforcement actions send a message that the
government has become more seri­ous about enforcing the law
against employment of illegal aliens, these tactics necessarily
require the collection of extensive criminal evidence and are very
labor-intensive for the agencies involved. While commendable, ICE
enforcement activities still affect only a minute fraction of
employers who deliberately hire illegal aliens; moreover, it is
possi­ble that current tactics may simply be too expensive to
use as a broad-based enforcement strategy. In the long run, a
comprehensive civil enforcement sys­tem, with higher fines and
regular enforcement, might yield greater dividends than the current
focus on criminal prosecution.

To be effective, an employment verification and enforcement
system must provide clear and fair rules for employers to follow, a
significant increase in the probability that violations will be
detected, and major increases in the penalties for deliberate
violations of verification procedures. An effective system also
should not generate large, unnecessary enforcement costs for
government. Ideally, a verifi­cation and enforcement system
should serve as an effective deterrent for the overwhelming
majority of employers and should provide fines and penalties for
rogue employers that are sufficient to cover investigative and
enforcement costs.

Targeted vs. Broad-Based
Verification

Some suggest that employment of illegal immi­grants is
focused in a few industries and that it is therefore unnecessary to
establish employment ver­ification across the entire economy.
Instead, a policy of targeted verification and enforcement in those
particular industries will suffice to effect significant reductions
in illegal immigration. This argument falls apart when one examines
the facts.

Though illegal immigrants are disproportion­ately
low-skilled, they are spread widely through the economy. Illegal
immigrants appear to work most commonly in six industries (in order
of descending scale): construction, restaurants, land­scaping,
janitorial services, food processing, and hotels. In fact, only
around half of illegals work in these industries.[33] Some 45 percent
may be visa overstayers rather than unlawful border crossers,[34]
and between 10 percent and 15 percent actually have a college
degree. Thus, they are spread more widely through the economy than
popular wisdom suggests.[35]

Moreover, employment verification through E-Verify is effective
only against "on-the-books" employment. Such hiring is more likely
to occur in higher-wage and higher-skill jobs and less likely to
occur in low-wage fields such as construction and farm labor. This
means that the "on-the-books" hir­ing of illegal immigrants is
likely to be less concen­trated in a few low-wage industries
than is "off-the-books" hiring.

For these reasons, employment verification laws should apply to
all industries equally to serve as a substantial deterrent to
illegal immigration, and law enforcement actions should be
prioritized to address the most egregious situations first.

Principles of a Sound Verification and
Enforcement Policy

Most illegal immigrants enter the U.S. with the intention of
working. An effective policy that limits the hiring of illegals
would likely cause many to leave the country and could reduce the
future inflows of illegals. A meaningful policy to verify the legal
status of workers and to enforce the existing prohibition on hiring
illegals should be one of the primary tools at the center of any
strategy to reduce illegal immigration.

A sound verification and enforcement policy should have at least
11 components.

Require universal employment verification. For 20 years,
U.S. law has prohibited the hiring of illegal immigrants, but there
has been no seri­ous effort to enforce this law. In order to
curtail illegal immigration, this statute should finally be
enforced by moving toward requiring all employers to use E-Verify
to confirm the employment eligibility of all new hires and
cur­rent employees.

Reauthorize E-Verify and provide adequate funding for
implementation. The law autho­rizing E-Verify expires in
March 2009. Congress should extend E-Verify as a voluntary program
and provide the funding needed for its contin­ued expansion and
improvement.

Currently, less than 10 percent of the 63 million annual new hires
in the U.S. are checked through E-Verify. While E-Verify should be
expanded, attempting to expand E-Verify to cover all ongoing new
hires immediately is impractical. The government should eventually
allow checks by participating employers of any existing employees
who have not yet undergone verification. E-Verify confirmation
error rates should be closely monitored and continuously driven
downward. DHS is already making progress in this area.

Improve government data to further reduce erroneous
tentative non-confirmations and provide opportunities for
individuals to review the accuracy of their personal data in
government files. While the recently imple­mented
procedures for confirming naturaliza­tion are a significant
improvement, DHS should further reduce this source of error by
upgrading its naturalization databases. DHS should further reduce
E-Verify errors by encouraging individu­als to enter both
maiden and married names of women into the system.

Opportunities should also be created for indi­viduals to
review the accuracy of SSA and USCIS data independently of the job
application pro­cess. Individuals who follow the proper process
but still lose employment or wages due to gov­ernment
misfeasance might receive financial compensation from the
government equivalent to lost wages.

Penalize employers who continue to employ workers who have
failed verification. The E-Verify system will be ineffective if
employers can continue to employ workers who have failed the
authorization check. However, it is not neces­sary for DHS to
perform expensive site visits to determine whether employers have
complied with the law by discharging employees who received final
non-confirmations.

Instead, DHS and SSA should review quar­terly wage reporting
data on an ongoing basis to identify employers who continue to
employ workers after receipt of a final non-confirma­tion.
Those employers should be informed that they are in apparent
violation of the law and served with a notice of intent to fine.
Increased funding should be provided to enable DHS and the
Department of Justice to prosecute employers who deliberately
violate the law, starting with those with the greatest number of
violations.

Increase penalties, in law and in practice, for unlawful
hiring. Most illegal immigration is employment-driven. To
achieve significant re­ductions in illegal immigration,
government must make it difficult for an illegal alien to work in
the United States and easy for an employer to tell the difference
between lawful and unlawful workers. To accomplish this, employers
must be given an easy and unambiguous means to iden­tify
unauthorized workers and face substantial penalties if they
willfully violate verification standards. Only that combination
will deter ille­gal employment.

The deterrent effect of any law is a product of (1) the
probability that an offense will be detected and punished and (2)
the severity of the penalty. Where the probability of apprehension
and the severity of penalty are low-as is the case with the current
verification regime-the deterrence value of a law is minimal.

From a practical point of view, increasing the probability of
punishment requires consider­ation of the burden of proof
required for govern­ment to obtain a conviction. With respect
to employment verification, there are currently two types of
offenses. The first relates to busi­nesses that employ workers
without proper ver­ification. Under a universal E-Verify
system, this would include employment without required verification
after final non-confirmation[36] or entirely off the books.
Proving this kind of con­duct in court is
straightforward.

The second type is willful violation of the rules prohibiting
employment of individuals known to the employer to be unauthorized
aliens.[37] This requires proving that a worker is in
fact unauthorized to work and that the employer knew that the
worker was unauthorized-an extremely heavy burden for government
prose­cutors. To prosecute the second level of offense, the
government would need to apprehend the worker in question and
determine that he is, in fact, and illegal alien (rather than, for
example, a native worker seeking to avoid child support or tax
obligations). Given that there are around 8 million illegal
immigrant workers in the U.S., general prosecutions based on this
second level of evidence would be impossible.

The problem is that the punishment for the first type of
offense-which it is relatively easy for the government to prove in
court-is so low that it does not deter illegal hiring. Most
employers can dismiss the existing fines of $250 to $1,000 per
employee as a minor cost of doing business. For example, a fine of
$1,000 is roughly 5 percent of the average annual wage paid to
illegal immigrant workers. This type of fine has virtually no
deterrent effect.

To be effective, these fines must be raised to the point where
they actually deter businesses from hiring illegals and are
sufficient to cover much of the cost of government investigation
and enforcement. For example, the fine for unlaw­fully
employing one worker might be set at $5,000, with higher fines for
repeat offenses. The fine for unlawfully employing multiple workers
might be set at $20,000 per worker (roughly equal to the annual
wages of illegal immigrant workers). The fines for "off-the-books"
employment, which would be more dif­ficult for government to
detect and prosecute, should be even higher.

In addition, tax law should be changed to bar employers from
claiming the wages of employees hired without required verification
as business expenses. DHS and SSA should share employ­ment
verification data with the Internal Revenue Service to facilitate
enforcement of this rule.

Facilitate information sharing between DHS and SSA. SSA
currently has information on spe­cific employers who have large
number of employ­ees with erroneous Social Security numbers or
other mismatched Social Security data. For exam­ple, in 2002,
over 70 employers had more than 5,000 mismatched employees
apiece.[38]

A significant number of these employees are probably illegal
immigrants, and their employ­ers should be prime candidates for
enforcement action by ICE. At present, however, SSA is barred from
sharing this information with DHS. This barrier should be removed.
Enforcement focused on apparent heavy offenders is an important and
efficient tool in combating illegal immigration and an essential
part of broad-based employment verification.

Issue clarifying letters to employers regard­ing Social
Security mismatch notifications. Each year, SSA issues letters
to employers who have large numbers of employees with false or
mismatched Social Security numbers. The employers are encouraged to
take steps to rectify these cases.

Recently, DHS sought to issue letters to employ­ers notifying
them that failure to rectify the mis­matched Social Security
numbers of employees could, in some circumstances, be regarded as
knowing and willful employment of illegal immigrants. A federal
district judge in California blocked the issuance of these letters,
citing a number of technicalities. The Bush Administra­tion has
now resolved these technical issues and should issue the letters.
This would be an important interim step in employment
enforce­ment, and it is one that can be taken immedi­ately
because it does not require new legislation.[39]

Do not restrict state efforts to limit the
em­ployment of illegal aliens. State governments such as
Arizona's are currently leading the national ef­fort to limit
the employment of illegals. Federal legislation should not impede
these efforts.[40]

Establish supplemental procedures to pre­vent employment
by means of identity fraud. One apparent shortcoming of
E-Verify is that it cannot prevent identity fraud. The E-Verify
sys­tem can easily detect an illegal alien who seeks employment
using a fictitious Social Security number and date of birth. In
this situation, a non-confirmation can be issued and the employment
prevented.

However, E-Verify cannot detect an illegal seek­ing employment
by identity fraud-that is, by using a legitimate name, Social
Security number, and date of birth copied from another real
per­son.[41] E-Verify can determine only whether
reported data are legitimate, not whether the prospective employee
presenting the informa­tion is the person he purports to
be.

The way to solve this dilemma is through the simple procedure of
notifying the real individual whenever a potential identity theft
has occurred. Specifically:

SSA would scan its wage database to identify individuals who held
two or more jobs simul­taneously over an extended period,
received Social Security benefits while working, or were employed
while under age 16.[42]

SSA would send a letter to the individual noti­fying the
individual that a potential identity theft may have occurred.
(Alternatively, it might be sufficient to target cases in which
identity fraud seemed most likely, such as cases involving
individuals with many simul­taneous jobs, individuals working
in two or more widely distant locations, retirees, or children
working in construction.) The letter would be sent to the
individual's home address as reported to SSA on the individual's
W-2 tax form.

The notice would identify each job apparently held by the
individual according to SSA records. The letter would inform the
individ­ual that if he actually worked at each job listed,
there was no problem and the letter should be ignored; however, if
any of the jobs listed were work he had never performed, the letter
would ask him to notify DHS or SSA through specified telephone
number or Web site.[43]

When SSA was contacted by an individual who stated that he was on
record as holding a job he never performed, SSA would identify the
suspect job site. SSA would share the information with DHS, notify
the employer at that site that a potential identity fraud had
occurred, and issue a tentative non-confirma­tion for the
suspect employee. The employee would then have eight working days
to con­test the non-confirmation at his local SSA office and
demonstrate the authenticity of his claims of identity. If the
individual failed to contest the non-confirmation within eight days
and offer evidence of his identity, a final non-confirmation would
be issued, and the employer would be required to fire the employee
or provide SSA with a rationale for retaining him.

This system offers a simple way to block most em­ployment
through identity fraud. Most Americans would be eager to notify the
government if they felt their identity had been used for fraudulent
purposes. Conversely, few persons engaging in identity fraud would
be willing to risk con­testing the tentative non-confirmation
issued under this system.[44]

In addition to the above steps, SSA and DHS should be empowered to
audit reported earnings data to pinpoint cases in which identity
fraud was most likely. These might include, for exam­ple,
individuals apparently working simulta­neously in a very large
number of different jobs or individuals working simultaneously at
two widely separated locations. Special effort could be taken to
investigate such cases.

Establish supplemental procedures to reduce
"off-the-books" employment by illegal aliens. As noted, it appears
that roughly half of illegal immigrant workers are employed off the
books. While on-the-books employment of unautho­rized workers
can be detected and blocked en masse through automated
systems, detection of off-the-books hiring is far more difficult.
Such detection must inherently involve piecemeal labor-intensive
investigations, and the task is made more difficult by the fact
that off-the-books employers in fields such as restaurants,
construction, and agriculture are likely to be small-scale.

Incorporate the current new-hire data collec­tion
for child support into E-Verify.[45] E-Verify and the new-hire
data system run by the Office of Child Support Enforcement at HHS
collect very similar information on newly hired employees; both
check employee information against the SSA databases for
accuracy.

However, there are major differences between the two systems:
E-Verify is designed to give accurate, immediate responses to
employers, usually within a few seconds. By contrast, the new-hire
system is intended to locate workers for purposes of collecting
child support pay­ments. It is not designed to provide quick
turn­around. The new-hire system is run by state child support
agencies or other state offices that have no interest in detecting
illegal immigra­tion or conducting employment verification.
Notifying employers of Social Security number mismatches is not a
central function of the new-hire data system. Feedback to
employers, when it does occur, can take weeks or longer, and many
states do not notify employers at all.

The two systems collect similar data and there­fore could be
integrated into a single data collection process, sparing employers
the unnecessary time and effort involved in dealing with duplicated
entries. However, since DHS needs immediate real-time responses for
employment verification and OCSE does not, E-Verify should serve as
the initial portal for data collection for both systems. Data from
E-Verify would be corroborated by the SSA data­bases and then
forwarded to OCSE for entry in its National Directory of New Hires.
This should fulfill the needs of both DHS and OCSE. By contrast,
any attempt to run DHS employ­ment verification through the
slow, antiquated, and cumbersome child support system would be
unworkable. Such a policy would set employment verification back by
a decade.[46]

Conclusion

It is imperative for the nation to re-establish the rule of law
concerning immigration. Our nation must gain control of U.S.
borders and reduce the number of illegal aliens in the United
States.

However, the choice between mass roundups and amnesty presented
by some politicians is a false dichotomy. A third alternative
exists: By seriously enforcing the laws against illegal immigration
in the U.S., the government can remove the incentives for illegals
to enter and remain in this country, thereby causing the bulk of
them to return home and sharply reducing future inflows.

E-Verify has proven to be quite effective, and efforts to
improve the system itself are ongoing. E-Verify is the most
promising employment verifica­tion system in existence in the
United States, and it should be continued.

Businesses must be able to distinguish quickly and accurately
between lawful and unlawful employees. The government must have
ready and instant access to information so that it can know when an
unauthorized worker has been hired and can assist the employer in
complying with the law. Businesses that deliberately seek to evade
the law must face penalties that are substantial and
suffi­cient to deter them from knowingly and willfully hiring
unauthorized workers.

It is time for Congress to keep its promise. Under current law,
employers are prohibited from hiring illegal immigrants. E-Verify
has shown itself to be a highly effective screening and enforcement
tool. The government continues to improve and expand the program,
and error rates are at historically low rates, especially for a
federal government program.

In moving forward, the objective is to achieve the goal set by
Congress 20 years ago. Our political leaders cannot hide behind the
"it needs further improvement" mantra forever, because doing so is
the functional equivalent of not enforcing the prohi­bition
against hiring illegals in the first place. With the improvements
suggested in this paper and those that DHS has been implementing,
we are fast approaching the time when past promises can become the
reality of a system that enforces employ­ment immigration laws
across the country.

-Robert Rector is Senior Research Fellow in Domestic
Policy Studies at The Heritage Foundation.

Appendix A

Objections to Expanding Voluntary
E-Verify and Employment Verification in General

Objection: It is inefficient to
implement employment verification for all employers; instead,
verifi­cation should be limited to industries where the hiring
of illegal immigrants is most prevalent.

According to this argument, the employment of illegal immigrants
is concentrated in a very small num­ber of industries and can
be prevented by instituting employment verification in those
industries alone. Eventually extending verification to all
employers would create substantial burdens on large numbers of
legitimate employers and employees with very little added benefit.
This argument is faulty for four reasons.

First, while illegal immigrants are disproportionately
low-skilled, they are not, despite conventional wisdom, working in
only a handful of industries and jobs. For example, illegal
immigrants work most commonly in construction, restaurants,
landscaping, janitorial services, food processing, and hotels, but
only around half of illegals work in these fields; the rest are
spread through the economy. Some 45 per­cent of illegal aliens
are visa overstayers rather than unlawful border crossers, and 10
percent to 15 per­cent of all illegals actually have a college
degree. Illegal immigrants are thus spread more widely through the
economy than popular wisdom suggests.

Moreover, employment verification through E-Verify is effective
only against on-the-books employ­ment. Such hiring is more
likely to occur in higher-wage and higher-skill jobs and less
likely to occur in low-wage fields such as construction and farm
labor. This means that on-the-books employment of illegal
immigrants is less likely to be concentrated in a few low-wage
fields than is off-the-books employment.

For these reasons, employment verification that is limited to
only a few industries is likely to miss most illegal employment and
unlikely to serve as a substantial deterrent to illegal
immigration. By contrast, employment verification across all
industries, coupled with procedures to limit identity fraud, is
likely to affect at least half of all illegal workers in the
U.S.

Second, employers in industries such as construction and
agriculture will object if employment verifica­tion is imposed
on their industries alone. They will argue that such selective
enforcement is discrimina­tory. By contrast, business has shown
a greater willingness to accept employment verification if it is
required uniformly for all employers.[47]

Third, current law states that it is unlawful to employ
illegal immigrants in the U.S. in its entirety. It does not state
that it is unlawful to hire illegals only in construction,
agriculture, and hotel work but law­ful elsewhere.

To create a policy that implicitly ignores or condones the
hiring of illegals in most industries but is very tough on such
employment in a few fields undermines respect for the law itself.
By conveying the implicit message that the government was not
really serious about enforcing the bar against hiring illegals,
such a policy of highly selective enforcement would invite the
public to regard the law cavalierly, thereby eroding support for
the entire strategy. For example, it would be impractical to
enforce stiff penalties on the hiring of illegals in a few
industries while completely ignoring such hiring in other fields.
Effectively limiting the hiring of illegals can occur only if
society at large respects the law and takes the policy
seri­ously. This will not occur if the law is deliberately not
enforced in industries where millions of illegals actively
work.

Fourth, the failure to enforce the current law is unfair
to lawful immigrants, citizens, and law-abiding employees. It
rewards those who break the law and penalizes those who abide by
the law. In the current situation, for example, an individual with
a temporary visa who remains in the U.S. unlawfully after his visa
has expired will be rewarded by the higher income that comes with
his presence in the U.S., but a similar individual who respects
U.S. law and leaves the country when his visa expires will be
punished by a loss of income because he obeyed the law.

This is wrong and unfair. We should not have a de facto
policy that creates financial rewards for those who break the law
and penalties for those who obey it. The unfairness becomes even
more extreme if the lawbreaker is granted amnesty and permanent
citizenship while the immigrant who lawfully left when his visa
expired may be unlikely ever to become a citizen.

Similarly, a policy of accepting employment of illegals in a
given industry rewards law-breaking employers in that industry by
giving them a competitive advantage and punishes the majority of
employ­ers who obey the law. The U.S. should have a policy of
universal fairness, not selective fairness. It should encourage
broad respect, not general disregard, for the rule of law.

Objection: Broad-based use of E-Verify
is not necessary to stop the employment of illegal immi­grants;
use of existing Social Security mismatch information will be
sufficient.

Each year, SSA issues "mismatch" letters to employees who have
identifying information on their W-2 tax forms that does not match
SSA Numident files. Some letters are also sent to employers with
large numbers of mismatched employees.[48] Some have argued that the
government should use these mismatch data rather than E-Verify to
prevent employment of illegals, but such a system would not solve
the prob­lem because the mismatch data are taken from W-2 tax
forms, which are received at the end of the year. Under such a
system, unauthorized workers could be employed for a year or longer
before any action to stop the employment was initiated.

Objection: E-Verify creates privacy
concerns because it allows employers (or individuals posing as
employers) to access employment records or other information from
the Social Security Administration.

E-Verify does not allow employers to examine information from
the Social Security Administration or other government agencies. It
simply allows the employer to corroborate that the name, date of
birth, and Social Security number submitted by an employee matches
a record in the SSA or USCIS files.

It would be impossible to mine or prospect for identity
information through E-Verify. Employers or other individuals cannot
use the system to obtain private information about individuals
against their will. For example, if an employer knew someone's name
and date of birth and wanted to obtain that individ­ual's
Social Security number for illicit purposes, the employer could not
obtain that number from E-Ver­ify; to do so, the employer would
literally have to submit millions of random Social Security numbers
for the individual to E-Verify until one of them accidentally
received a positive confirmation. SSA and DHS could immediately
detect that sort of abuse.

Objection: Americans should not be
required to prove to the government that they are eligible for work
in order to obtain a job.

In fact, for over 20 years, all Americans have been required to
provide evidence of their eligibility for employment. During that
time, employees have been required to show their driver's licenses
or other doc­uments to demonstrate that they were legally
eligible for work. The employer copies information from the
documents provided by the employee onto the official I-9 forms,
which then collect dust in the employer's file cabinets.

This process has not worked, because the government has lacked
the means to examine and verify the accuracy of the information on
the I-9 forms. E-Verify is a promising solution. It simply
translates the information on the I-9 into an electronic format,
thereby allowing the government to determine the accu­racy of
the information quickly and efficiently and then act on that
determination.

Some argue that E-Verify would create an unacceptable barrier
between U.S. citizens and jobs. All Americans have the right to
seek work and (according to this argument) should not be required
to prove to the government that they are eligible for work. But
they already do just that.

While proponents of this view may agree that it is proper for
the government to prohibit the employ­ment of illegal aliens,
they feel that it is improper for the government to check the
authenticity of claims of citizenship in order to carry out this
prohibition. That argument is illogical: It is impossible to
prohibit the employment of illegals without determining who is a
citizen or lawful resident and who is not.

To obtain employment, most illegals submit documents indicating
that they are either citizens or law­ful immigrants. In order
to prohibit the employment of illegals, the government must be able
to separate those who are truly eligible to work from those who are
not. To accomplish this, the government must be able to verify the
information provided to the employer by the prospective
employee.

Objection: Requiring E-Verify coverage
for all employees would entail enormous government costs.

Requiring E-Verify checks for all new hires and all existing
employees would entail around $1 billion in new government costs
over a four-year implementation period. This amounts to about $2.50
per U.S. household per year.

Objection: Mandating universal
E-Verify coverage for all employees would impose inordinate costs
on business and would be especially burdensome to small
business.

The market price for checking individuals with E-Verify is
around $10 per employee. Business hires around 63 million new
employees per year. If all new hires were checked by E-Verify, even
at a higher cost of $20 per employee, the total annual cost to
business would be around $1.2 billion per year. This amounts to
about $12 for each household in the U.S. It is always important to
be cautious about adding new regulatory burdens and/or costs to
business.

The estimated costs of implementing E-Verify appear to be modest
in comparison to the magnitude of the illegal immigration problem.
Moreover, E-Verify and the current new-hire data collection system
for child support collect very similar information from business.
If the existing new-hire data collection were incorporated into a
universal E-Verify system, the added costs to business to operate
E-Verify could be significantly reduced.

Objection: Errors in the E-Verify
databases will cause many citizens and lawful immigrants to be
barred from employment.

In recent years, E-Verify has delivered an erroneous tentative
non-confirmation to around one in every 250 U.S. citizens or lawful
work-eligible immigrants screened by the system. These erroneous
tentative non-confirmations required the individual to correct
errors in his Social Security files. Correcting these errors almost
always involves a trip to a local SSA office. Recent modifications
in the E-Verify process should cut the erroneous response rate at
least in half.

Additionally, an estimated one in 300 U.S. citizens or lawful
work-eligible immigrants receives an erroneous final
non-confirmation from E-Verify because he did not contest an
earlier tentative non-confirmation. This problem can and should be
reduced by providing individuals with a greater opportunity to
review and correct their personal Social Security information
files.

Objection: E-Verify is ineffective
because it cannot prevent employment by identity fraud.

Identity fraud will never be completely eliminated. However, the
supplemental procedures advocated earlier in this paper could be
highly effective in blocking employment of identity thieves.

Objection: Expanding E-Verify could
cause the system to crash because of inherent technological
problems of scalability.

Not true. E-Verify currently processes around 5 million
inquiries per year. If the government mandated coverage of all new
hires, the result would be over 60 million inquiries per year. Some
have expressed concern that this scale of expansion might cause
problems with the underlying computer hardware; how­ever, USCIS
has tested the E-Verify system's ability to expand. Those tests
showed that, with the addition of five servers, E-Verify could
process up to 240 million inquiries per year.[49]

Objection: E-Verify creates privacy
problems by enabling the government to collect new informa­tion
on people and permits DHS to access SSA data.

Not true. The only personal information entered into E-Verify is
the employee's name, date of birth, Social Security number, and
citizenship status. This information is already included in the
official I-9 forms that the employer completes for each employee.
E-Verify merely allows USCIS to check the infor­mation on the
I-9 in a secure, encrypted, efficient, and timely manner. Moreover,
the government already has this information in its records and
routinely collects similar information as part of the new-hire
pro­cess and for purposes of collecting income and FICA
taxes.

Less than 200 DHS employees (in USCIS) operate the E-Verify
system in cooperation with SSA. These employees have access only to
the information submitted through E-Verify and the SSA confirmation
or non-confirmation of that information. They do not have access to
the larger SSA employment history and earnings files for
individuals. DHS employees cannot view or examine SSA records; they
can merely cor­roborate that the limited identity data
submitted for an individual through E-Verify do or do not match
information in the SSA files.

The Westat evaluation of E-Verify concluded that the system
created "little increased risk of misuse of…information by
federal employees."[50] In addition, "it is unlikely that the
program increases the likeli­hood of misuse of personal
information."[51]

The SSA Numident data files represent the only means by which
DHS can reasonably determine whether an individual is a citizen.
Preventing DHS from corroborating information against SSA records
in an efficient manner to determine the legitimacy of citizenship
claims would scuttle any meaningful effort to limit the employment
of illegal immigrants. Specifying in law that DHS personnel can use
SSA data only for definite enforcement purposes might assuage
privacy concerns, although this principle is already implicit in
E-Verify operations.

Objection: Federal and state
governments already collect information on newly hired employees
for the National Directory of New Hires (NDNH) database, which is
used for child support enforce­ment; the new hire data for the
NDNH, not E-Verify, should be used for employment verification.

The new-hire reporting system is maintained as part of the
National Directory of New Hires by the Office of Child Support
Enforcement (OCSE) at the U.S. Department of Health and Human
Services. This is a slow, cumbersome, and complex system that
cannot realistically be used for employment verification; nor is it
designed to do so.

Under the current new-hire data reporting system, employers
provide information on recently hired employees to state government
agencies. (In some cases, the agency may be a private contractor
hired by the state.) The state agency then sends the employee data
to OCSE in Washington. OCSE sends the infor­mation to SSA to
check for Social Security mismatches. SSA returns the checked data
to OCSE, which sends the information back to the state agency,
which in turn communicates with the employer.

The time lag for the initial submission of data alone can be 32
days or longer. (Employers have up to 20 days after hiring to send
data to the state agency, which has eight days to submit the data
to OCSE, which in turn has four days to enter the data into the
NDNH database.)[52] The time frame for communi­cating
mismatch data back to employers is unclear. Employers can submit
information by a variety of means; by law, they have the right to
send all information in written form by physical mail to their
state agencies.

Providing mismatch data is incidental to the main function of
the new-hire data system; many states do not bother to communicate
this information to employers at all. The new-hire process is too
slow and error-prone to be used for employment verification, and
the idea of interposing unrelated state child sup­port agencies
(or independent contractors hired by the states) as unnecessary
intermediaries channeling verification communications between SSA
and DHS and employers is both inefficient and unworkable.[53]

Still, the E-Verify and new-hires reporting systems do collect
similar information. If electronic employ­ment verification
became mandatory for employers, E-Verify and new-hires data
collection could be inte­grated, thereby eliminating the need
for employers to submit the same data twice; however, this
integration should be accomplished by upgrading and streamlining
the new-hire data collection through E-Verify rather than saddling
DHS with an antiquated, cumbersome data process that is entirely
unsuit­able for verification purposes.[54]

This means that any new law requiring employers to use E-Verify
should also eliminate the present fed­eral requirement for
states to collect new-hire data for child support. Instead, all
new-hire data should be collected directly by E-Verify and
transmitted (along with information on final non-confirmations and
Social Security mismatches) from SSA and DHS to the NDNH at OCSE.
OCSE would then share the information with state child support
agencies. The need for states to collect new-hire data
independently and send them to SSA for corroboration would be
eliminated.[55]

This system would meet the needs of both employment verification
and child support enforcement. By contrast, creating an employment
verification system that used antiquated new-hire technology and
inter­posed state child support offices as unnecessary
intermediaries between SSA and DHS and employers would be a recipe
for failure. Replacing E-Verify with the new-hire data collection
system would be like replacing a stealth bomber with a Model T
Ford.

Appendix B

Accuracy of Numident Data

The Office of the Inspector General of the Social Security
Administration divided its audit into three groups: native-born
citizens, foreign-born naturalized citizens, and lawful
residents.[56]

Native-Born Citizens

These individuals comprise 87.5 percent of the Numident files.
While the OIG audit found data dis­crepancies in 3.3 percent of
the Numident files for native-born citizens, nearly all of these
were potential false positive discrepancies. Only 0.5 percent of
the Numident files of native-born citizens contained false negative
errors that would result in the individual being issued a temporary
tentative non-confirmation from E-Verify.

Typically, these false negative errors involved name
misspellings or clerical errors concerning date of birth in the
Numident file or a failure to update a woman's name after she had
changed her name through marriage. All of these errors were the
sort that could easily be corrected by a short visit to the local
Social Security office, thereby eliminating the tentative
non-confirmation from E-Verify. Most of these errors would
eventually need to be corrected by the individual under any
circumstance.

Another 3.1 percent of Numident files of native-born citizens
contained potential false positive errors. All of these errors
involved individuals who appeared to be deceased but were not
recorded as dead in the Numident database; many had a "tentative"
but not a final deceased entry in their files.

The fact that large numbers of deceased persons are registered
as potentially alive in the Numident files would seem to be a large
loophole through which illegal aliens could falsely be verified for
employment; however, exploiting that loophole would be difficult.
An illegal immigrant would need to know the name, date of birth,
and Social Security number of the deceased person as well as the
fact that his demise was not recorded by Numident. The OIG report
suggested that this potential loophole could be further
nar­rowed by having E-Verify issue a tentative non-confirmation
for individuals who had tentative death notices in their Numident
files.

Naturalized Citizens

Around 1.8 percent of the Numident files were individuals
recorded as naturalized citizens. OIG found discrepancies in 3.1
percent of these files "that could result in incorrect employment
eligibility feedback" through E-Verify. OIG also found that 0.7
percent of the files of naturalized citizens contained clerical
errors such as incorrect date of birth that would result in a false
negative tentative non-confirmation from E-Verify.

OIG did find that 2.3 percent of individuals listed as
naturalized citizens in Numident were not citi­zens but
immigrants whose work eligibility was unclear. E-Verify would issue
a false positive confirma­tion in these cases. Although these
errors do represent a vulnerability in the operation of E-Verify,
it is a small one. If E-Verify were used for all 63 million new
hires in the U.S. each year, only about 24,000 unlawful workers
could be expected to slip through this loophole.

Finally, the OIG found that 5.3 percent of the "naturalized
citizens" in the Numident files were not cit­izens but legal
permanent residents or other immigrants authorized to work in the
U.S. E-Verify would give a correct positive confirmation
authorizing employment to these individuals even though the
under­lying citizenship data were wrong. Many of the errors
concerning citizenship status involved older data entered before
Social Security began to corroborate immigration data with the
Department of Homeland Security.

Non-Citizens

OIG found that non-citizens comprised 10.7 of all Numident
cases. The OIG audit found discrepan­cies in 10.4 percent of
these records. Two-thirds of these discrepancies involved
individuals who had been naturalized but were still shown as legal
permanent residents in the Numident files. Changes imple­mented
in May 2008 should reduce the number of tentative non-confirmations
issued by E-Verify for these cases.

The remaining one-third of discrepancies (involving about 3
percent of all non-citizen files) involved cler­ical errors
such as misspellings of names or errors in date of birth. Although
E-Verify would issue an errone­ous non-confirmation for
employment in these cases, this situation could easily be resolved
by a brief visit to a local Social Security office. This small
remaining problem could be greatly reduced if individuals were
provided with an opportunity to check their Numident data
independent of the hiring process.

[2]Clearly, stemming the tide of illegal
immigration at the border is an important element of immigration
enforcement. This paper, however, deals with another aspect of
immigration enforcement; namely, enforcing the laws that prohibit
employers from hiring illegal aliens.

[7]Nothing in this paper suggests eliminating the
option of employers to notify DHS that they intend to continue
employing a particular employee and explaining the reason they
believe the worker is authorized. These cases could be called "good
cause" exceptions. For example, at various points, the paper
discusses penalties for employers who continue to employ workers
after receiving a final non-confirmation. These penalties would not
apply to employers who had filed for a "good cause" exception.
However, substantial penalties should be in place to prevent the
abuse of this exception rule.

[10]Ibid. Seven percent might appear high,
but this ratio can be explained by the pattern of E-Verify use at
the time of the survey. The system was used primarily in states and
industries with disproportionately high numbers of illegal
immigrant workers.

[11]Ibid., p. 98. Based on data from
October 2004 to March 2007. About two-thirds of contested cases
resulted in a positive confirmation, and one-third resulted in a
final non-confirmation.

[16]For additional information from the OIG
analysis of the Numident files, see Appendix B.

[17]If 6 percent of potential workers receive
final non-confirmations and 5 percent of those final
non-confirmations are erroneous, then the overall rate of erroneous
final nonconfirmations would be 5 percent of 6 percent, or
three-tenths of 1 percent: roughly one person in 300.

[20]Based on a sample of 10 designated agents
contacted in April and May 2008. Some designated agents also charge
modest enrollment fees for new clients.

[21]Office of Management and Budget,
Regulatory Impact Analysis, Employment Eligibility Verification
Federal Acquisition Regulation; FAR Case 2007-013, Notice of
Proposed Rule Making, May 29, 2008. Calculations in the text
are for year 2010. Data on start-up, training, and verification
costs were taken from Table 13 on p. 46. Data on the estimated
number of employees to be vetted through E-Verify were taken from
Table 3 on p. 27. Small added costs from induced employee turnover
and replacement were not included as these would not occur if
E-Verify was in universal use.

[23]Richard M. Stana, Director, Homeland Security
and Justice Issues, U.S. Government Accountability Office,
"Employment Verification: Challenges Exist in Implementing a
Mandatory Electronic Employment Verification System," testimony
before the Subcommittee on Social Security, Committee on Ways and
Means, U.S. House of Representatives, GAO-08-729T, May 6, 2008.

[41]
A related tactic is for an illegal immigrant to provide a real but
stolen Social Security number with a bogus, unrelated name and/or a
bogus date of birth. E-Verify would quickly identify this ploy and
issue a non-confirmation.

[42]
To uncover cases of identity fraud would require the auditing of
recurring reported earnings data as well as E-Verify data. It is
possible that it might not be necessary to send warning letters to
all individuals with multiple concurrent jobs.

[43]
Each warning letter sent to an individual would need to contain a
unique identifier that the individual would use in contacting DHS.
This would prevent prank or hoax calls to the system.

[44]
If the suspect employee provides credible evidence of an authentic
claim to the contested identity, a tentative non-confirmation
should then be sent to the original complainant to reconcile the
claims. If SSA finds two apparently valid but conflicting claims to
the same identity, SSA/DHS should contact local law enforcement to
resolve the issue. The normal penalties for identity theft should
apply.

[45]This discussion of the overlap between
E-Verify and the new-hires data collection system applies only to
the first phase of new-hires data collection that identifies new
employees; it does not apply to subsequent quarterly collection of
wage data.

[46]
Some claim that the New Employment Verification Act of 2008,
introduced by Representative Sam Johnson (R-TX), would operate
employment verification through the existing antiquated
child-support new-hire system. The NEVA bill does not exactly do
this; instead, it would eliminate the current E-Verify system and
then create a new system similar to E-Verify that would operate out
of SSA. Transferring authority over employment verification from
DHS to SSA is a bad idea, as is the proposal to eliminate the
current effective E-Verify system and replace it with a very
similar system operating in SSA. The net effect of this proposal
would be to delay the implementation of real employment
verification and undermine efforts to control illegal
immigration.

[47]Interview with the staff of Representative
Heath Schuler (D-NC), June 2008.

[48]Stimson and Grossman, "No-Match Immigration
Enforcement: Time for Action."

[52]U.S. Department of Health and Human Services,
Administration for Children and Families, Office of Child Support
Enforcement, National Directory of New Hires: Guide for Data
Submission, Document Version 9.0, December 29, 2004, p.
8-2.

[53]The existing new-hire system is too slow to
meet the needs of employers for employment verification. For
example, in recent congressional testimony, a spokesman for the
U.S. Chamber of Commerce declared that "[e]mployers would like to
have the tools to determine in real time, or near real time, the
legal status of a prospective employee or applicant to work."
Angelo I. Amador, "Statement of the U.S. Chamber of Commerce on
Electronic Verification Systems (EEVS)," testimony before the
Subcommittee on Social Security, Committee on Ways and Means, U.S.
House of Representatives June 7, 2007, p. 9. The new-hire data
system does not give real time or near real time responses.

[54]The data elements used in the two systems
overlap but are not identical. For example, E-Verify uses date of
birth, while the new-hire system does not. The new-hire system
records the employee's home address, while E-Verify does not. An
integrated system would need to collect the necessary data used by
both systems.

[55]The new-hire system would need to continue to
collect subsequent quarterly wage data.

[56]
Social Security Administration, "Accuracy of the Social Security
Administration's Numident File."

Share

The E-Verify system accurately authenticates the personalinformation given by prospective employees. In most cases,verification occurs almost instantly. Congress should reauthorizeE-Verify in its present form and work to expand its reach andefficacy significantly. Broadly deployed, E-Verify promises to easeenforcement of existing immigration laws and thereby deter illegalhiring and illegal immigration.

Key Points

1 Most people who enter the United States illegally
or who unlawfully overstay their visas
do so for purposes of employment. Addressing
the employment magnet is essential to
reducing illegal immigration.

2 The law making it unlawful for U.S. businesses
to hire illegal immigrants has never
been seriously enforced. Current law gives
employers little incentive to screen job applicants’
immigration status and reject those
who are not authorized to work.

3 Employers should be empowered with a tool
that quickly and accurately determines
whether a job applicant is authorized to
work. The E-Verify system accurately authenticates
the personal information given by
prospective employees. In most cases, verification
occurs almost instantly.

4 Congress should reauthorize E-Verify in its
present form and work to expand its reach
and efficacy significantly. Broadly deployed,
E-Verify promises to ease enforcement of
existing immigration laws and thereby deter
illegal hiring and illegal immigration.

Key Points

Most people who enter the United States illegally
or who unlawfully overstay their visas
do so for purposes of employment. Addressing
the employment magnet is essential to
reducing illegal immigration.

The law making it unlawful for U.S. businesses
to hire illegal immigrants has never
been seriously enforced. Current law gives
employers little incentive to screen job applicants’
immigration status and reject those
who are not authorized to work.

Employers should be empowered with a tool
that quickly and accurately determines
whether a job applicant is authorized to
work. The E-Verify system accurately authenticates
the personal information given by
prospective employees. In most cases, verification
occurs almost instantly.

Congress should reauthorize E-Verify in its
present form and work to expand its reach
and efficacy significantly. Broadly deployed,
E-Verify promises to ease enforcement of
existing immigration laws and thereby deter
illegal hiring and illegal immigration.

Rep. Peter Roskam (R-IL) says it's "a great way to start the day for any conservative who wants to get America back on track."

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